Navellier Growth: your source for market-beating growth stocks

We’re in the final few days of the first quarter and it’s a quarter that Wall Street mostly wants to forget. I don’t blame them. Not only did the credit crisis go from bad to worse, but it also took out one the Street’s most revered banks—Bear Stearns.

This caught some folks by surprise.

But don’t say I didn’t warn you.

The government threw cold water on the market this morning by reporting that the economy grew by a measly 0.6% in the fourth quarter. I think the first quarter might even be worse. In fact, there’s a very strong possibility that the economy got smaller during the first three months of the year.

The fact is, we’re in a recession. That means that the rules of the investing game are different. In this week’s issue, I want to explain how to take full advantage of the current economic climate.

Emerging Growth Stocks Are Leading the Market

First, let’s review what happened in the fourth quarter. The S&P 500’s earnings declined by 22%, but that’s not the whole story. If you exclude financial stocks and their mega write-downs, the S&P 500 posted a respectable 12% earnings increase. That’s not too bad.

But our Emerging Growth service did much better. The reason is because we focus like a laser beam on the strongest stocks on Wall Street. That’s been the core of our investing philosophy for nearly 30 years, and it’s one of the best ways to prosper when the economy doesn’t look so hot.

The average stock on my Emerging Growth Buy List had sales growth of 44.5%. What’s even better is that our stocks saw an average earnings increase of 238.8%.

The reason why our profits have grown so much faster than sales is due to profit-margin expansion. This is a crucial test for any Emerging Growth stock. When a company is able to expand its profit margins, that often means it’s the leader in its sector. As a result, it has strong pricing power, which is crucial in this economy.

Focusing on sector leaders also helps explain why Emerging Growth has been able to beat the market regularly for many years. According to the latest count, our legendary Buy List has improved investors’ wealth by over 50-fold since 1985. That means we've lapped the rest of the market three times. In fact, we’re close to making it a fourth time! Can you tell I’m a little bit competitive?

You can take this opportunity to sign up for three months of Emerging Growth for $295. Or you can get a full-year subscription for $995. I understand that you may simply want to test-drive the service. Either way, I stand behind Emerging Growth 100%. That’s why I’m prepared to make this extraordinary offer: If you don’t like Emerging Growth, you can cancel at any time within the first 90 days, and get all of your money back. Every penny. That’s how much faith I have in our research.

The best news is, our Emerging Growth stocks are trading at discounted prices! Currently, our Buy List is going for slightly over 15 times this year’s earnings. On a valuation basis, we’re really bouncing along the bottom. That’s one of the key lessons about investing in difficult times. The bargains are there, but they’re often hidden in plain sight.

How to Prepare for the Second Quarter

The last day of the first quarter is this Monday. The April issue of Emerging Growth comes out after the market closes tomorrow. Soon, Q1 earnings reports will start coming out, and I expect that many of my Emerging Growth stocks will surge.

Let me warn you: One of the problems facing the stock market right now is mass redemptions by mutual fund investors.  Cash now represents 25% of the value of the Wilshire 5000. That’s close to the all-time high of 29% reached in late 2002.

But here’s the good part: As soon as investors feel better about the stock market, there’s plenty of ammunition—in the form of cash—to fuel a prolonged rally. The upcoming earnings season will be a mixed bag, which was similar to the fourth quarter. But as long as stocks with impressive fundamentals lead the market, our Emerging Growth stocks should do very well.

Wall Street has simply forgotten about fundamentals lately. I’ll give you a perfect example. Two of my favorite Emerging Growth stocks, Crocs (CROX) and Terra Nitrogen (TNH), have had stunning sales growth (99.1% for Crocs, 66.8% for Terra Nitrogen). Yet both stocks are going for only seven times this year’s earnings.

I'm currently working on the April issue of Emerging Growth, and given the market's recent volatility, this is a crucial issue for investors. As I said before, it will be emailed out to all of my subscribers after the market closes tomorrow.

I haven’t finalized my research, but it looks like I'm going to add three new stocks to our Emerging Growth Buy List. The first company makes containers for bulk shippers. This sector has been very strong lately. The second stock specializes in removing contaminants—its earnings skyrocketed 685.7% last quarter. The third is a generic drug company that just boosted its guidance for 2008.

In the issue, I’ll also discuss the Fed’s recent rate cut, and my outlook for the Fed’s meeting next month. Additionally, I’ll have a brand-new Top 10 list. I hope you take advantage of this opportunity to get Emerging Growth. Sign up today.

That’s all for this week. Remember, don’t let the market’s twists and gyrations frighten you. This is often the time to find the best bargains. I’ll have the next issue of “What’s Working on Wall Street Now” next Thursday, April 3.

Sincerely,

Louis Navellier

P.S. If you haven’t had a chance, please check out my new NavellierGrowth.com website. It's simply overflowing with breaking market news, stock tips, how-to investing advice, investing tools, an interactive stock of the week feature and much, much more. I update it every day—so be sure to visit NavellierGrowth.com today!